Keywords: transfer pricing, system simulation, differential pricing, global business, global strategy, developmental divide, consumer surplus, competitive advantage, consumer participation
System simulation across the developmental divide: toward achieving global business advantage and consumer surplus through transfer pricing
Of late, the term digital divide has been increasingly gaining currency to represent the gap between the technology haves and have-nots. The term Developmental Divide is used in this paper to represent a similar gap in development and socio-economic factors across different countries. It is argued that contrary to popular perceptions, developmental divide does not create barriers to trade, but opens up opportunities for increasing global business advantage and consumer surplus at an aggregate level. Using system simulation under different demographic and socio-economic assumptions, this argument is illustrated through the concept of Transfer Pricing and increased participation of consumers.